YieldBoost ACCO From 6.5% To 33.1% Using Options

Shareholders of Acco Brands Corp (ACCO) looking to boost their income beyond the stock's 6.5% annualized dividend yield can sell the August covered call at the $5 strike and collect the premium based on the 15 cents bid, which annualizes to an additional 26.6% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 33.1% annualized rate in the scenario where the stock is not called away. Any upside above $5 would be lost if the stock rises there and is called away, but ACCO shares would have to advance 7.1% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 10.3% return from this trading level, in addition to any dividends collected before the stock was called.